ETF Focus

ETFs Unsociable to Social Media

The really big ETFs have so far not seen a social-media company large enough to warrant a significant holding. That will change with the IPO of Facebook. But will its listing signal the arrival of a whole new industry, or just a single big company?

Thank You

Error.

Judge the mainstreaming of social-media stocks by how deeply they penetrate major exchange-traded funds. Until recently, there hasn't been much to watch. But what may become the biggest event in this niche happened two Fridays ago, with the quiet issuance of an evening press release by Nasdaq OMX Group: The exchange said it was shortening the "seasoning" period for possible entrants to the Nasdaq 100, the index of the biggest nonfinancial stocks it lists, to just three months.

Certainly, this sector's volatility should make an exchange-traded fund's ability to screen out single-company risk attractive to long-term investors. But this assumes that there are enough people with an interest to begin with.

Social-media investing still faces a struggle between Zuckerberg's vision of a blue-chip holding, on one hand, and the market realities for the sector's existing stocks on the other.

The exchange-traded-fund industry has been aggressive enough to build roads into specialty asset classes like livestock or Indonesian small-caps. You'd think that more firms would try to get ahead of the social-media story -- if it were worth getting ahead of. But the ETFs that have been shuttered over the years included a helping of Internet-themed products, so most providers are taking a wait-and-see attitude.